I suppose the argument there then is that it is still all technically within your over-arching “active” account it is just “divided” into little sub-sections.
Whereas someone could have any number of set-ups with ISA/ Easy-access/ Locked/ Un-locked pot which makes working out what is in your “active” account slightly more difficult.
Exactly so where do you draw the line? The non-interest bearing pot is entirely opt-in and for the most part is to “siphon” money for specific goals or to ringfence bill money until bill date - so by “forgetting” that that money exists, you are able to work out how much money you “actually” have to spend. Whereas if that is allowed to be incorporated in your overdraft and interest calculations it doesn’t feel ringfenced to me.
But it is ringfenced. Using Monzo’s own definition of “interest” in their recent simplified English blog post, why shouldn’t they pay interest on money you have deposited into a Pot? And why should they charge you for being overdrawn when you have money deposited with them, albeit it in a Pot?
I do agree that since the introduction of third party Pots with different rules and rates of interest, it does muddy the waters. I still think it would be trivial for them to include basic Monzo Pots in the credit and debit interest calculations.
Oh course I realise it is actually ringfenced and until I move it into my active balance I can’t spend it - but that is for most the core benefit of a non-interesting bearing pots that it is siphoned off and “inaccessible” so to know that my overdraft and interest are affected makes it feel like it isn’t - which for some might be crucial - but I agree I would prefer the way starling operate as it seems “fairer” to all involved.
I do agree here and think you lay out perfectly how it should operate - I am in a way playing devils advocate as to if it were to continue to play out now (not factoring into overdraft and therefore not factoring into interest).
It is for me, the only problem is that a majority of people use a pot to siphon money away for exactly when it is need (committed spend) and so therefore for that to affect whether they are actually overdrawn may be more of a hindrance than a benefit - they want to know what they are on exactly at that point (having disregarded committed spend) - if that makes any sense?
This may be a rather cynical view - but it may be encouraging the use of the savings pots (and therefore a way for Monzo to get the sweet sweet % via the partnership agreement.
But I do think Monzo need to have a “review” of their overall goals, once the revenue stream push has died and it’s possible to reflect
Which was my reasoning for going with the 2.5% for balances under £1k.
It seems counterintuitive to offer interest on larger balances as it would disincentivise using pots. Though I’m making an assumption that few people leave 4k in their main balance.
Obviously, it doesn’t take into account daily compounding of a fluctuating balance, or the fact that if you hit the cap you’d likely move it to a different pot but…
Basically at the 1.5% rate, this is the most “effective” between a balance of £1666 and £6000.
So for most, the question would be on average is your balance between £0-£1600 or £1600-£6000.
When Monzo launch taking direct debits out of savings pots. Won’t this mean that there would be money less money in the Monzo account to gain interest on as people would leave just their spending money in the account?
Excellent stuff, I was doing this earlier and including the easy access pots but got distracted and didn’t finish.
My balance is never that high because it doesn’t earn interest at the moment but I would prefer to keep some more as a buffer and I wouldn’t feel like I was losing out with either the 1.5% or 2.5%.
Not the person your replied to, but it’s a Sankey diagram (not a flowchart), built using http://sankeymatic.com/build/ – it’s fairly popular over on UKPF as well.
that flowchart, insane organisation skills. I do mine on a boring spreadsheet. £2.3k in general living expenses so we’re in a similar situation.